T Nation

The Principles of Wealth


No, I'm not talking about the New Age "Secret" DVD or book, I'm talking about a basic principle which I thought was worthwhile posting here.

There is one, and only one, basic rule essential to grow wealth.

The Most Basic Wealth Principle is this: Produce more than what you consume.

There is only one way to create wealth, and that is by producing more than you consume. The wider the gap between what you produce and what you consume, the greater will be the rate of increase in your wealth.

In other words, produce more money than what you consume. This is simple, and self-evident, yet a great many people do not live this way, instead living the opposite. They consume more than what they produce - they borrow more money than they have, to buy the things they WANT today. They sign up for cable TV, mobile phone plans, car loans, credit cards, the lot. It's hard not to give in to temptation, isn't it? But that's why so many people making a decent income are struggling to meet their day-to-day needs, and in debt.

Another way to describe producing more than you consume is to use the terms "delay of gratification" versus "instant gratification." If you immediately consume what you produce you are receiving "immediate gratification," but if you produce more than you consume on a consistent basis you are "delaying gratification." All truly successful people know that success is ultimately achieved, not immediately, but in the long run through the delay of gratification.

Often we wish for the something-for-nothing dream. Like scavenger animals, we wish to find wealth already created and intact - such as winning a lottery. The harsh reality of producing more than is consumed, is unpalatable to a person who lives in the range of the moment, without a concept of accumulation of wealth over time.

The prosperity conscious human produces more than he or she consumes. By following this plan, he or she cannot help but come to wealth. Even a poor person, applying this principle will come to a better end than those who consume all they produce.

Just food for thought...



I think too many people get out of school and get this cushy job making 60k to 80k per year.

While this is great pay for an entry level B.S. I think a large percentage of them look at their income and say "I'm rich" and just go buy $90,000 worth of stuff with 70k of income.


This is no secret, but it is true and a good point.

Truth is, most consumers don't know better and that new TV on 36months interest free is just too damn tempting to pass up.

Short term pleasure leads to long term pain.
Short term pain equals long term pleasure.

I'm 23 and quit my job. I don't need to work. I don't have debt and I have assets providing enough income to support myself. It really isn't that hard, but its exactly like jb said, delay of gratification and now I have plenty of gratification.



A lot of people here on T-Nation would already realize these facts.

I'm just trying to point out that in our consumeristic society, we all are getting pushed towards consuming more than what we produce, towards instant gratification.

Young people are being conditioned this way - they expect everything 'now'.

Except for those in the upper echelon of society (the wealthy elite), most people cannot sustain this way of living without ending up in a lifetime of debt and slavery.

Emancipate yourselves.


Getting out of debt is the most sure form of wealth creation there is.

I used to have no money at the end of the month, and could only afford the minimum payment on my credit cards. I was a slave to the banker. All of my money went to someone else.

After becoming debt free, I have tons of money left over at the end of the month, and I sleep like a baby most of the time.

Peace of mind, and making 3 times what my living requirements are. That's wealth to me.


You've done smarter life management than a lot of others in your generation, to be in that position already.

The thing is, nobody is taught these kind of life management skills in high school. You either have to figure it out yourself, or learn it from someone/somewhere else.

Word. Nothing beats peace of mind. That's the direction I'm trying to head in.


It would be great if colleges had a mandatory "creating wealth" class during the last semester you are in school.

But that might not be commie enough for a university.


Barely any people get out of school making that much money. A lot of people graduate with a degree in something and don't even have a job.


What assets are these? If at 23 you already don't have to work it sounds like your parents had money (or assets) that they gave to you, or you still live with your parents and have no bills to pay.


I know

But the point was that if you get too comfortable too quick you don't feel you need to learn proper financial management skills.


A good exercise to let you know what you really need is to think "if I was fired tomorrow what would I do". I'm just in school atm but if I wasn't and was just working I could cut my expenses down to $450(rent) + $100(food) + $100(utilities) = $650 per month.

This means I don't break lease and stay at my nice apartment and I don't have cable, internet or any expenses on entertainment that I don't already own...wouldn't be turning on the A/C either.

I remember in High School I was required to take at least 3 math courses. One of those required math courses should be a real world personal finance class. Make the students use entry level salaries and cost of living for the cities they want to live in. Then again lots of people are fucking retarded and have to keep up with the Joneses.


See, I never seem to get people to understand this. I listen to relatives complain because they can't ever do anything but pay bills, and they can barely keep their head above water.

But they eat out every single day, they subscribe to a $120 cable plan with four TVs in the house, they live in a huge house that they only use about a third of. They lease their cars instead of buying a nice used one outright, they keep charging stupid things to their credit cards....

Some people are just too stupid to figure out that they're their biggest problem.


I have never asked/got for anything from anyone. My parents have no money. The only thing they gave me was a car, and the engine blew up 6months later so I brought my own. I moved out when I was 18. I've spent over $10'000 on investment courses(which really isn't that much compared to some), attended seminars, spent hundreds of hours reading books and learning what I could. My family is exactly like the people you are talking about, soon as they have some cash, its spent on material things.

Unlike other people my age, I didn't spend every cent on a new model car and spend even more doing it up. I didn't go out every weekend getting pissed. I didn't blow all my money on shit that now sits in the garage collecting dust. Well I did do these things a little, but thats it.

I've sacrificed my time, given up weekends. When most people are watching TV, I'm learning.

It really isn't any different then bodybuilding, it takes commitment, dedication, desire, hard work and patience. Desire will get you anything you want.

Delayed gratification.

I'm barely making enough to get by right now, and I have cut my expenses right down, but I don't have to work, which was my main goal. It will only go uphill from here. I'm not working for my money.

School's teach you that you need to be smart or work hard to earn money. You do need to realise that it is up to you, and you alone to do something about it.

The opportunity of a lifetime passes us every 2 weeks...so they say


Find something you enjoy so much that you would do it for free. Then make that your job. You will ultimately succeed because your pleasure associated with it will make it not seem like work.


Exactly why I went to school for music. It can pay the bills (especially teaching), but it doesn't feel like work. Time flies by when I teach, and performing is such a high that it doesn't seem like I should get payed to do it.


If you are lucky enough to do what you love for a living, you will live better, longer, and be happier overall. Unfortunately, not everyone will enjoy these things.


Do you have a car? What about gas? And $100 for food...a month? Are you eating Ramen noodles every meal or what?


I would like to add buying electronics 2-5 years old will increase the gap you speak of.

Need a house phone? Get the old cheapy phone your parents had when you were a kid. It works and probly costs 10% of the wireless phones you see in stores now.

TV? Same thing, as if HDTV is a requirement...

Car? Same thing, get one 3-6 years old.

Snowboard? What? The boards they made 3 years ago weren't cutting edge back then?

Do this to everything except for your true passion. If you're obsessed about cooking get the best damn cooking shit, but everything else get it from the past and profit!


Live within your means.


I'm 16 so I can't add shit, but my sister knows what she's doing and I'll add the one piece of advice that she gave me that I think is particularly good and often overlooked:

Always come through. In the business world, people are always being let down. Always do what you promise. People will think that you're going above and beyond if you're reliable when you're really just doing exactly that your job is.

I don't know if that's relevant, but it makes sense to me.